100G and the Road to 400G

The transition to 100G network speeds inside the data center is underway at every major hyperscale operator simultaneously, creating major industry bottlenecks. Despite QSFP28 being supply constrained, component and equipment suppliers are also trying to align on the next generation format for 400G operation. Cignal AI’s key takeaways from OFC 2017 with regard to data center optics include:

Inphi is the market share leader for coherent driver and receiver electronics and wanted to highlight exactly how much of their product is in the field.

“Network operators are very sensitive to quality and reliability as network uptime is a metric that has a direct impact on their bottom line,” said Andrew Schmitt, Lead Analyst at Cignal AI. “Inphi’s coherent amplifiers are used industry wide in almost all 100G and 200G long-haul, metro, and DCI networks. The company continues to invest in leading edge technology and will lead the transition to 400G coherent as well.”

Inphi announces a companion component to its 400G TIA, and now offers electronics to interface the latest 400G+ DSPs with coherent optics.

Single wavelength coherent 400G+ technology needs electronics that can support 16/64QAM modulation and challenging symbol rates of up to 64GBaud,” said Andrew Schmitt, founder and lead analyst at Cignal AI. “Inphi’s IN6417SZ is a critical component for enabling 400G coherent roadmaps at key customers who are focused on bringing next-generation of 400/600G line cards and pluggable modules to market as quickly as possible.

On February 27th, Cignal AI issued full optical equipment market share analysis for 4th quarter 2016 (4Q16). This second report, issued on March 9th, extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 4Q16 along with detailed, up-to-date forecasts. A compilation of our latest analysis is also available in both web format as well as .pdf.

Lightwave quotes Andrew Schmitt in its article regarding the acquisition of Clariphy Communications by Inphi:

Andrew Schmitt, founder and lead analyst at Cignal AI, believes that Inphi may not be comprehensive enough to take full advantage of its pending new assets. In particular, combining optical components (which Inphi currently doesn’t have) with the ClariPhy DSPs to create modules and other subsystems would make a stronger play, Schmitt believes.

“Strategically, I think it makes sense for someone like Inphi,” Schmitt said on a Piper Jaffrey analyst call earlier this year in regard to a potential Inphi/ClariPhy tie up. “I would argue that it makes more sense for an optical component company to take that approach – someone like an Oclaro, an NEL Photonics, or a Finisar. Because then they can, in essence, deploy the same model that Acacia has deployed. That is, being able to closely couple all the optics and the DSP to sell a full subsystem. Whereas Inphi can’t really do that.”

Andrew Schmitt gave an update on the optical equipment and component market during an investor call hosted by Troy Jensen of Piper Jaffray on Tuesday, October 4. Sixty-eight investors participated. An extended Q&A session followed Andrew’s presentation, and topics of interest included:

Andrew Schmitt presented at the ECOC (European Conference for Optical Communications) in Dusseldorf, Germany during the week of Sept. 19. No time was wasted during the trip as Andrew fit in well over 30 scheduled meetings with component and equipment suppliers and end users of optical hardware.

The meetings were very productive and we gained new insight in several areas:

Huawei’s plans to transition to 100G CFP-DCO technology and what will follow

Updates on vendor selection and R&D in coherent DSPs

Details on the ongoing ramp in CFP2-ACO and the development of this new market

Inphi bet big and bet early on linear drivers, rather than limiting drivers, for coherent applications. As a result they dominate this market. It announced a product refresh at ECOC 2016.

“Inphi is a leading supplier of drivers for optical modulators and is a critical supplier of technology to reduce the cost of metro coherent and non-coherent interfaces,” said Andrew Schmitt, founder and lead analyst at Cignal AI. “Devices such as the IN3217SZ enable the higher densities and lower cost solutions that are needed in coherent 100G and 200G applications today.”

ADVA released excellent quarterly results on Thursday, July 21th and its optical business is hitting on all cylinders right now. The company expects to sustain its current revenue surge through the coming quarter as it continues to ship an impressive amount of 100G ports.

ADVA’s results illustrate the pivotal impact that Cloud and Colo customers exercise over quarter to quarter revenue. These customers don’t follow the more steady and predictable buying patterns of traditional incumbent wholesale carriers.

Furthermore, ADVA’s robust results are an exceptional leading indicator for Acacia, which will report shortly on August 11th.

Andrew Schmitt created some excitement when he spoke about optical component and equipment market trends on a Piper Jaffray investor call on April 22. 83 investor clients were on the line, and some insightful questions were posed to Andrew as he gave his observations on a wide range of topics. The following is a full transcript of that discussion.Continue Reading

Andrew presented “Metro DCI – What’s Next?” at the annual OSA Executive Forum before OFC 2016. His slides focused on the evolution of metro DCI and highlighted the opportunity for metro-access 100G, including coherent and non-coherent approaches.

Component and equipment vendors outlined the investments they are making in anticipation of some service providers adopting open line systems or fully dis-aggregated optical systems. This is a contentious technology trend in the industry; one which ignites opinions and whose conclusion is far from clear.

After silicon photonics, this was the area of the most interesting activity during OFC 2016. It is a complex trend requires equipment & component vendors to pivot both their hardware architectures and business models to address new potential opportunities. And it is far from clear whether this market will extend beyond the webco.

The optical component industry is changing from one in which existing InP and discrete designs are replicated in SiPho to a new approach under which the unique benefits of SiPho are better exploited. Several announcements made recently at OFC 2016 underscore that companies are beginning to migrate to these key applications for silicon photonics.Requires Optical Active Insight subscription.

MultiPhy’s efforts with non-coherent 100G 4×28 solutions for metro interconnect met with limited success. Finisar was first to market with this approach, and their largest customer ADVA sold it with great success. But the volumes for this approach so far are dwarfed by shipments of coherent solutions.

Like InPhi, which has already invested heavily, MultiPhy will target the much larger volumes of the 2km datacenter market first then look to stretch the capabilities of PAM-4 to attack the 100G metro access market.